HMRC Now Wants Five Tax Filings a Year. Are You Caught?
HMRC Now Wants Your Tax Return Five Times a Year. Here's Who Making Tax Digital Actually Catches.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax, often shortened to MTD for IT, started on 6 April 2026 and changes how self employed people and landlords report to HMRC. Instead of one annual return, anyone in scope now sends four quarterly updates covering their income and expenses, followed by a final declaration at the end of the tax year confirming their overall tax position. That's five submissions a year rather than one, and every one of them has to go through HMRC compatible software rather than the old online return.
Who has to use Making Tax Digital for Income Tax?
It applies to sole traders and landlords whose qualifying income was over £50,000 on their 2024/25 tax return. HMRC doesn't automatically sign everyone up, so the responsibility to check sits with you. You can use the eligibility checker on GOV.UK to see whether and when you need to join.
What counts as my income for the £50,000 threshold?
The test is gross income, which means what you take in before any expenses come off, not your profit. Self employment and property income are added together, so someone with £32,000 from a trade and £20,000 from a rental property has £52,000 of qualifying income and is inside the system, even though neither figure reaches £50,000 alone. Employment income, pensions and dividends don't count towards the threshold. The Association of Tax Technicians also notes that rent a room receipts under £7,500, and trading or property income under £1,000 where the allowance is claimed, don't count if they aren't included on your return.
What do I actually have to do under Making Tax Digital?
You need to keep digital records of your income and expenses and send quarterly updates through compatible software. You can't submit those updates through the old Self Assessment return or by typing figures into the HMRC website. All four quarterly updates must be sent before HMRC will let you complete your tax return for the year. If you're digitally excluded, you may be able to apply for an exemption, but it's worth sorting that out well before your first deadline.
When are the Making Tax Digital quarterly deadlines?
For the 2026/27 tax year, the quarterly updates are due on 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027. The final return for 2026/27 is due by 31 January 2028.
What happens if I miss a quarterly update?
Late submissions run on a points system. You get one point for every missed deadline, and once you reach four points HMRC charges a £200 penalty, then another £200 for each deadline you miss after that. Income Tax and VAT points are counted separately. For 2026/27 there's a soft landing, confirmed at the Autumn Budget 2025, which means no penalty points for late quarterly updates this tax year. From the 2027/28 tax year, late quarterly updates count. The soft landing only covers quarterly updates, so late filing of the tax return itself can still earn points, and you still have to send every update.
What happens if I pay my tax late under Making Tax Digital?
Late payment penalties run separately from the points system and the soft landing doesn't cover them. For 2026/27 liabilities, HMRC charges 3% of the unpaid tax once it's 15 days late and a further 3% at 30 days, with interest charged on top. The tax for 2026/27 is due on 31 January 2028.
Will the Making Tax Digital threshold go down?
Yes, and both reductions have already been confirmed. The threshold falls to £30,000 from 6 April 2027, based on your 2025/26 income, and to £20,000 from 6 April 2028. Each step brings a much larger group of sole traders and landlords into the system, so it's worth checking where your income sits against all three figures, not just today's.
Can I leave Making Tax Digital if my income drops?
Not straight away. Once you're in, your qualifying income has to stay below the relevant threshold for three consecutive tax years before you can opt out. For anyone who joined in April 2026, that means the earliest exit is after the 2029/30 tax year, however far their income falls in the meantime.
Why is HMRC bringing in Making Tax Digital, and what do critics say?
HMRC's case is that more frequent reporting catches errors earlier and helps narrow the tax gap, the difference between the tax that should be paid and what actually is. Critics point out that moving from one filing to five means more admin and often a new software cost for people already running a business single handed. The Low Incomes Tax Reform Group warned in October 2024 that the system needs to work properly before the threshold is lowered further. Both points are fair, and which one carries more weight probably depends on whether you're the one doing the filing.
What should I do now?
Check whether you're in scope on GOV.UK, get your records into compatible software, and put the quarterly deadlines in your diary. HMRC reported that more than 436,000 sole traders and landlords had already sent their first quarterly update for 2026/27, and said it would begin signing up people who should be using the system but hadn't joined, starting in September. If you're close to £30,000 or £20,000, it's worth getting set up early rather than waiting for the threshold to reach you.